ACC Follows ESPN into Network Era

Greg Barnes

07/21/2016

The ACC Network is forecasted to increase league revenues despite failing to account for cord-cutting consumers.

CHARLOTTE, N.C. – The ACC, in partnership with longtime television rights partner ESPN, announced on Thursday a new media agreement and the launch of the ACC Network by 2019 with the channel’s digital component, ACC Network Extra, debuting next month.

The agreement, which was revealed at the league’s annual media event, extends the current contract through the 2035-36 season.

Beginning in 2019, the network will showcase 450 exclusive live events, including 40 regular-season football games and more than 150 men’s and women’s basketball games, as well as various types of original programming. Until then, fans can utilize the digital channel for 600 live games in 2016 with that number expected to grow to more than 900 by 2019.

ACC Network Extra will only be available to ESPN subscribers through the media giant’s WatchESPN platform. That decision fails to address the growing number of cord-cutting consumers that are moving away from traditional cable and satellite packages. ESPN has reportedly lost seven million subscribers over the past two years, in part due to the exodus of viewers preferring more consumer-friendly subscription-based options.

Reaching the cord-cutting segment of the population was not a discussion in ACC meetings, according to Kevin White, Duke’s athletic director and the ACC Television Committee Chair.

“Our partner is in the business of creating businesses,” White said. “Have they failed yet? I mean, these guys have an amazing track record. Every business they’ve created has been highly successful. I have every confidence in the world the ACC Network is going to be on that list. We’re going to be a very, very successful endeavor because we’ve got the right partner.”

The ACC passed on the opportunity to be a digital pioneer in reshaping the current trends of streaming and digital rights by offering a subscription-based product to instead cement revenue under the ESPN umbrella.

“We’re aware of what the landscape is,” ESPN President John Skipper said. “We’re committed to continuing to drive value into the traditional pay television universe while not being unaware of other opportunities, different packaging mechanisms, over-the-top opportunities. We’ve experimented with direct to consumer. The good news about a long term relationship – you heard about the extension through ’35-36 – it gives us a long time to experiment with a number of things. You have to take advantage of what’s here now and figure out in the future how to do things.”

The ACC will become the fourth Power 5 conference to create its own network, joining the SEC, the Big Ten and the Pac-12. The Big Ten Network, the product of a partnership between the Big Ten and Fox, pays its member institutions $8 million per year. The SEC Network does not release specific payouts to its schools, although the conference reported a nearly 50 percent increase in television and radio rights fees ($311.8 million in 2015, up from $210.4 million in 2014) during the first year of its network endeavor.

The ACC reported $217.9 million in television revenue for the 2014-15 fiscal year, and paid out an average share of more than $26 million to its member institutions. That share is well below the shares paid to the Big Ten ($32 million) and SEC ($31.2 million) schools, although the ACC Network should at least level the playing field.

ACC commissioner John Swofford declined to disclose financials, but told reporters the network deal "certainly should put us in the upper echelon of Power 5 conferences in terms of revenue."

White took it a step further, citing the additions of Syracuse, Pittsburgh, Louisville and Notre Dame as the basis for the potential of significant revenue growth.

“We represent 45 percent of the U.S. households within our footprint and what we call the inner market,” White said. “We are clearly the clubhouse leader within the Power 5. And so that’s even before you start talking about outer market interests and appeal and appetite. When you put it together, I think we’ve got the best opportunity of anybody because our inner market is so strong and so ripe and I think our product can be pretty tantalizing to the outer market.”